Category: Startups

Now get over the shock that you are a scaly skinned cold-blooded reptile who also owns a computer and can browse the internet.

Okay with that behind us, welcome to being a lizard. As a cute little lizard you will be spending the day making choices about where to walk and jump.

Having recently been embodied as a human with similar abilities this is likely a relatable position.

You’ll mostly be choosing to walk and jump in directions that you hope will reduce the distance between your mouth and tasty lizard food.

This is also likely relatable.

Occasionally though, you may have to decide if you want to sever your own tail from your body or not.

This is likely not a particularly relatable situation for a lizard who was once a human. Humans don’t have tails. We also can’t detach our extremities from our torsos. Ok we can but not particularly efficiently.

Why would a lizard ever want to do this?

Maybe in in act of teenage rebellion from its overbearing parents?

Maybe it’s more of a fashion statement?

Some kind of lizard self-service gender reassignment?

Allow me to pepper in some context…

See, lizards have this cool superpower where they can regenerate their tails if attacked by a predator.

This is not particularly helpful if you’re plucked from ground by your head in the case of the above.

But you know, there are only so many images of falcons eating lizards on Google so I had to compromise.

If a falcon had indeed caught you by the tail it might be in your best interest to say ‘adios’ to that appendage.

It buys you another day of life after all. Being alive is a perk of living. Another thing that we can all related to.

Okay, probably enough lizard talk.

When long-term thinking gets you killed

Most people know that long-term thinking is better than short-term thinking if you are trying to build wealth. The problem is not the awareness of this truth, but rather getting your behavior to reflect your understanding.

This post is not about why long-term thinking is good and why you are a total dumb dumb if you’re not doing it RIGHT NOW. This post is about when short term thinking actually IS better than long term thinking in the context of startups.

(By the way you are welcome to go back to being a human again while you read the rest of this.)

Startups = Lizards

Your stupid, tiny startup is a lot like that lizard that was snatched up by the falcon.

“The falcon” for startups is running out of both money & hope at the same time. That is the condition of startup failure.

In the long term, we are all dead. For lizards & startups that is sometimes equally true in the short term.

Solutions: have backup plans for ensuring that you have enough cash. Earn more money than you spend. Don’t spend money on things before you need to. Oh, and have a real human accountant.

2. Founder is lying to themselves

The canonical example of this for me is faking product-market fit.

Founders know that this is a thing you need to have, because Y Combinator and Mark Andreessen say so.

So, they pick a metric that makes it look like they indeed are one of the select few startups that have iterated their way to PMF. After all it is easier to get funded if you’ve already got PMF. So, an easy way to increase funding chances (in theory) is to just move the PMF goalpost to where you are today.

Everything works in powerpoint.

Amazingly, these founders will be able to eloquently articulate the underlying root causes of their startup failure in their post-mortem Medium article. Too bad they didn’t think through those failure scenarios before the falcon had cialis 20 mg them dangling over some very hungry winged offspring.

Solution 1: start being paranoid and think about why your startup is going to fail all the time. This is called inversion and a rich guy name Charlie Munger is sort of obsessed with it.

Solution 2: Surround yourself with people who call you on your BS and give you honest feedback. Like that accountant from above.

3. Startup lacks urgent survival instinct

This is the well-funded VC startup failure scenario. If left unchecked, millions of dollars in a bank account can become terminal.

VC backed companies can operate without a sense of survival for months, sometimes years. For the survival brain this is akin to a 6 month ban on falcons in your area. What happens is you over-invest in scalability before force feeding reality into your business model.

This is like making the lizard forget it has the ability to save itself when the falcon grabs it by the tail.

Solution: bootstrap. The more practice you have staring death in the face the faster you will learn how to survive.

General lesson: Be prepared to make ugly moves

So short-term thinking is good now? Does Wall St. have it right after all?

Well no.

Short-term thinking is still not advised. But the reality is that sometimes the right thing to do is to make a downright ugly move.

Leaders that navigate startups to sustainable places know when to stop thinking long-term and to start making ugly moves in key moments.

You’re going to have to invest additional energy, attention, and resources in rebuilding the culture and mindset of long-term thinking in your company.

You’ll need to be clear with your team about why you made an ugly move and reaffirm that it was not ideal. You lead a 5 why’s analysis to eliminate the conditions that created the circumstance. You should find more accountability partners and seek more negative feedback.

These are the yeomen activities that successful long-term thinkers perform in the aftermath of an ugly move.

It’s how you make that ugly move a mere blip on a timeline that eventually leads to a sustainable and profitable company.

His work life? That was just something that got in the way of skateboarding.

Each weekday he commuted into work and plopped down at a dusty cubicle. For eight hours a day his eyes would burn into the shapes of spreadsheet cells. His mouth persistently stained with the taste of cheap coffee. It was….soul crushing.

He’d usually trudge home around 7pm. By then it was too dark to do much skateboarding.

He was too tired anyway.

When the weekend arrived Travis’ energy levels always skyrocketed. He’d kickstart any given Saturday by rallying his skateboarder friends via group text.

They’d rendezvous somewhere in the city and spend the day perfecting new tricks, talking shop, and uncovering unexplored terrain.

This was what Travis lived for. He wished he could do it all the time.

One particular Saturday Travis found himself in the mall buying new shoes.

While waiting for the dude to come back with a size 11 to try, he gazed up at the Vans logo above the racks of shiny shoes.

It in that moment an idea hit him like a sack of bricks:

‘Why not start my own skateboard company?’

Everything suddenly snapped into focus. It felt like his entire life had been leading up to that single idea.

He could merge his passion with his income!

The next day he quit that soul-crushing job in a huff of confidence. A ‘last day of school’ feeling washed over him as he raced out of that Godforsaken parking lot for the very last time.

He was free.

The next day he Legalzoomed his way to a Delaware S Corp: Skateboard, Inc. He came across a small business lender willing to wire him $30k to get things rolling. He signed a 2 year lease on a warehouse to store his products. He set up a Squarespace eCommerce site.

Two weeks later he sold his first skateboard. It was coming together.

Of course, there was an overwhelming amount of work ahead to get the business to breakeven. Months whizzed by as if they were days. His sole focus in life was to make the business work.

By month 6 something felt wrong.

He noticed that he’d actually been skateboarding a lot less these days. Why?

Well, he needed to maintain inventory of course. That required hours upon hours of staring into spreadsheet cells. He had to handle customer service too. He also had to log all his crumpled receipts into Quickbooks with an app that sorta worked.

There was ‘always something’ that got in the way of skateboarding. His friends began to realize this and stopped including him in their group texts.

One day he was aimlessly staring up at the Skateboard, Inc. logo above his boxes of inventory.

It was in that moment that a difficult thought hit him like a sack of bricks.

‘I’m not happy anymore.’

This realization sent Travis into a tailspin. It felt like he’d spent all those 80 hour weeks building himself a prison. Instead of one soul destroying job it now felt like he had five of them.

Sure the spreadsheets were about skateboards. The phone calls were aboutskateboards. The bills were about skateboards.

But Travis’ life was not about skateboarding. It was about keeping Skateboard, Inc. above breakeven.

Eventually Travis had enough. He shut down Skateboard, Inc. and got a job at that Vans store in the mall. Missing out on skateboarding was simply not worth it anymore.

The Skateboarder Paradox

The Skateboarder Paradox is the simple idea that tethering your income to your passion will fundamentally change how you practice that passion.

Don’t let internet marketing bloggers trick you, ‘entrepreneurship’ is not the only way to do what you love. They are biased because their identity is too wrapped up in the notion to give unbiased advice.

The truth is that creating a business is merely one option on a vast spectrum of ways to practice what you love. Infrequently is it actually the best option.

Doing what you love as an employee in an existing company is a perfectly wonderful and valid lifestyle. Maintaining a separation between passion & income might be making you happier than you have context to realize. It affords you the freedom to perform your passions authentically without the burden of breakeven distorting your choices.

Skateboarder Paradox is something to consider before making the plunge into business ownership.

Naturally, these collisions of interest led us both to the game of Scrabble. As a kid, I’d find moments to fit in games, usually a matchup of titans that also included my younger brother.

My Mom would always play very unique, impressive words with solid point values. Quorum comes to mind. Her words would often draw ‘oohs’ and ‘ahs’ from my brother and me for their creativity. Her strategy was to win through sheer mastery of the English language.

I had a different approach.

There was only one letter that I wanted to find after reaching into that noisy pile of little wood tiles: the S.

I’d stockpile these nuclear weapons in my war-chest and wait for just the right spot in the board to appear. Maybe Mom placed Quorum right before a triple word, which just so happened to line up with the tail end of my brothers Zit.

My fingers quivered with anticipation the moment before I’d expose the dream killer.

I’d swiftly slam down the single point S. I’d confidently relay the number to my brother, our official game accountant so that he could add it to the overall tally.

‘That one is worth 81.”

My deflated counterpoints demanded we consult the Scrabble Elders to assess the legality of this seemingly unjust manipulation. Too late.

To them this was unfair leapfrogging. To me, it was art.

Don’t build the board, fill gaps.

Some of the most successful technology companies have won using this ‘Add an S’ heuristic. For example:

Startups are not built to spend all their cash on customer education. They are supposed to spend it on customer acquisition. These two are easily conflated yet they are definitely not the same thing. For example, TiVo was a $200m customer education exercise that paved the way for millions of knockoff Time Warner DVRs to acquire all their (now wonderfully educated) customers.

I’m not arguing here that customer education is inherently evil. What I’m saying is that education is a strategy designed to eventually transition money from your customer’s wallet into yours (not someone else’s).

If you sell a product before anyone deeply feels the unmet need it solves, you’re unfortunately going to be spending a boatload of money making them feel said need. You’re going to be building the whole Scrabble board from scratch.

If you find that it is going to take too much time and money to incept your customers into acquiring a taste for your product, modify your offering.

In all likelihood someone bigger is waiting for you to do their R & D for them on your dime. Sure, if you move fast enough maybe they’ll acquire you instead, but ‘let’s cross our fingers and hope we get bought’ is not a strategy.

Instead, scale as if you need to become an actually functional business with a clear path to market saturation independent of acquisition scenarios. You can’t do that if you are spending all your time on heavy-handed customer education in the market you think you want in lieu of acquiring customers in a market that already want the thing you can make.

Uncover that stagnant industry that has not been Warby Parker-fied. Reconfigure an asset class that has not been Uberized. Attack that bloated sector that has not been SpaceX’d. Ask yourself what are the cleverest ways to solve an existing need 10x better on a dimension customers will still care about 10 years from now.

Find your gap, build your game piece, and look for opportunities to Add an S.